Why the Rich Should Be Ready For IRS Scrutiny

By Jilian Mincer

Whoever says the rich suffer less than the rest of us hasn’t seen the most recent Internal Revenue Service audit numbers. In recent years, the agency has ramped up its scrutiny of wealthy taxpayers – especially those earning more than $500,000 annually, according to a Wall Street Journal story by Laura Saunders, who writes the Tax Report.

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Accountants and tax preparers say the heightened analysis is significantly different from the audit practices of the previous decade. While the percentage of taxpayers who were audited increased in every income category in 2010, there was much more scrutiny of the very rich. More than 18% of those with adjusted gross incomes of at least $10 million were audited in 2010, up from 10.6 in fiscal 2009. About 11.5% of those earning $5 million to $10 million were audited in fiscal 2010 compared to about 7.5% a year earlier. In contrast, fewer than 2% of those earning between $200,000 and $500,000 and less than 1% for those earning $100,000 to $200,000 got the extra attention.

Readers, are you worried about the increased likelihood of an audit? Do more audits keep taxpayers more honest?